In general, there are five reasons why Evergrande suddenly fell into trouble.

1. Although Evergrande began to "suddenly brake" in 2017, the burden of history was too heavy

In 2017, although the country had begun to regulate the real estate industry, it was absolutely impossible at that time. Most people are optimistic about the real estate industry, and housing prices in most cities are still rising. Therefore, in 2017, most real estate companies were using large-scale debt for expansion, and Evergrande Real Estate suddenly began to "suddenly brake", carry out strategic transformation, begin to reduce debt, leverage and costs, and start the "three lows and one high" model.

In 2017, Evergrande’s pressures all stemmed from historical burdens, because before 2017, Evergrande acquired a large number of projects and assets in order to expand on a large scale. In order to reduce debt and digest previously acquired projects, Evergrande began to "suddenly brake" in 2017.

However, the high assets and high liabilities acquired in this way are not easy to digest. As the real estate market environment becomes worse and worse in the next few years, the impact of large-scale acquisitions will jeopardize the future development of Evergrande. There is a big hidden danger.

2. Underestimating the country’s determination to regulate the property market, the strategic direction is wrong

In December 2016, the country first proposed the concept of “housing for living, not for speculation”, clarifying that “housing is for living, not for speculation”. "Houses are for living in, not for speculation." The country has expressed its determination to regulate the property market. However, real estate companies still do not pay attention to this issue. They still borrow money for expansion on a large scale and do not take "housing is for living, not for speculation" at all. Something happened.

At the end of 2019, the central bank began to strictly investigate the inflow of illegal funds into the property market, and the real estate industry felt the financial crunch for the first time. Immediately after the end of 2020, the China Banking and Insurance Regulatory Commission issued regulations on the centralized management of real estate loans by commercial banks, and the real estate industry began to deleverage.

By 2021, under the simultaneous influence of the "Three Red Lines" and the "Loan Restriction Order", not only will it become more and more difficult for real estate companies to obtain financing, but also the mortgage loans of home buyers will also begin to be restricted. It is a fatal blow to real estate companies with high debt and high turnover.

3. Under the influence of regulatory policies and "housing is for living, not for speculation", the purchasing power in the market is constantly decreasing

As the state regulates the real estate industry more and more and " "House for living, not for speculation" has gradually become popular among people, and people in our country have also changed their attitude toward housing prices. At present, not only are new home buyers starting to buy houses for the main purpose of living, but investors are also gradually no longer optimistic about the trend of housing prices.

Currently, the housing prices in our country are at a high level, and most people who can afford a house have a house. However, this group of people not only no longer continue to invest in houses, but have begun to sell off real estate, resulting in second-hand housing everywhere. The number of housing listings continues to surge, and the listing price of second-hand housing continues to decrease, which has a great impact on the new housing market.

On the other hand, many home buyers who just need to buy a house have seen that housing prices continue to fall. The idea of ??"buying up, not buying down" has made many people who are ready to buy a house hesitate. Purchasing power in the current market is getting lower and lower, which has seriously affected the speed at which real estate companies can withdraw funds. The high-turnover business model of real estate companies has been unable to change.

4. Evergrande has too many operations, and other operations are basically at a loss, resulting in a financial black hole.

Many people say that the reason why Evergrande is in its current situation is because of its operations. It has a lot to do with it. Evergrande is also transforming, but Evergrande's transformation is all about its deep pockets. That is, when it first enters an industry, it invests heavily. With its deep pockets, it needs to build scale in a short period of time and then occupy the market on a large scale. For example, Evergrande Football, Evergrande Ice Spring, Evergrande Automobile, Hengteng Network, etc.

Evergrande invested heavily in these transformation projects, and quickly packaged these companies for listing and financing, but without exception, these companies suffered losses every year. With the current problems in Evergrande, the stock prices of Evergrande listed companies such as Evergrande Real Estate, Evergrande Automobile, Evergrande Property and Hengteng Network have been falling. These companies have gradually lost their financing capabilities and become one burden after another.

5. Evergrande has too many financial means and the financing cost is too high

Compared with other real estate companies, Evergrande likes to pay dividends very much because the major shareholders hold a large shareholding ratio. After dividends are distributed, the business results of the company do not remain with the company. However, Evergrande has used large-scale debt to expand, using various financing channels, and even financing from ordinary people and all employees through Evergrande Wealth.

At the same time, Evergrande also introduced strategic investments to many companies. However, in 2020, with the help of the government, Evergrande converted 125.7 billion of the 130 billion strategic investors into common equity, and now Evergrande Real Estate The market value is less than 30 billion. When this happens, Evergrande's financing channels are basically cut off. Profits continue to be distributed and liabilities continue to increase, which is difficult for any enterprise to bear.